Existing Members as at 31 March 2014 Active members as at 31 March - PowerPoint PPT Presentation

Existing Members as at 31 March 2014  Active members as at 31 March 2014, will have transferred automatically to the New Scheme on 1 April 2014.  Benefits built up until 31 March 2014 will be protected under the current regulations and will continue to be linked to your Final Salary upon their retirement.  Additional protection has been awarded if (as at 31 March 2012) you were within 10 years of their Normal Pension Age as at 1 April 2012 i.e. over age 55 as at 1 April 2012.

How much will I pay?  A ‘Contribution Banding Arrangement’ will still exist.  Under the 2008 scheme, contribution rates were based on your annual full time equivalent pay, even if part time.  From 1 April 2014, your rate is to be calculated in accordance with your annual ‘actual pensionable pay’ . ‘Non - contractual overtime’ will become pensionable from  1 April 2014.

Contribution Banding Arrangement Band Actual Pensionable Pay Gross Rate (%) 1 Up to £13,500 5.50 2 £13,501 to £21,000 5.80 3 £21,001 to £34,000 6.50 4 £34,001 to £43,000 6.80 5 £43,001 to £60,000 8.50 6 £60,001 to £85,000 9.90 7 £85,001 to £100,000 10.50 8 £100,001 to £150,000 11.40 9 £150,001 or more 12.50

When can I retire?  You will be able to retire at anytime from age 55 to 75.  Employer Consent NO longer needed to draw benefits between age 55 and 60.  Your Normal Pension Age (NPA) will be linked to your ‘current’ State Pension Age (SPA), which will sit between age 65 and 68!!  Any future change in SPA, will mean a change to your NPA!  You can calculate your State Pension Age online: - https://www.gov.uk/calculate-state-pension

How will my benefits be calculated?  NO LONGER a ‘final salary’ scheme from 1 April 2014. The new Scheme will operate on a ‘Career Average Re - valued Earnings’ (CARE) basis.  Benefits will be calculated with reference to ‘actual pensionable pay’ (from 1 April to 31 March) and will build up at a ‘1/49th’ accrual rate.  You will have a ‘pension pot’ for each of your employments, which will be credited annually with the amount of pension built up for that year (from 1 April to 31 March).  Your pot will then accumulate and will be re-valued annually in line with the Consumer Price Index (CPI).

’97 Scheme ’08 Scheme FS FS ’14 Scheme CARE Membership ... Membership ... From ... up to 31 March 2008 1 April 2008 to 1 April 2014 Annual Pension (80th) 31 March 2014 + Annual Pension ONLY Automatic Lump Sum Annual Pension ONLY (60th) (49th) (3/80th) Commutation Total Benefits Option Annual Pension £1 pension = Automatic Lump Sum £12 tax free cash (subject to HMRC limit)

Calculating your ‘CARE’ Benefits  Assess ‘actual pensionable pay’ from 1 April to 31 March .  Actual Pensionable Pay ÷ 49 = ... Y4 Y3 Y5  Pension deposited to ‘pension pot’. Y2 Y1  Pension pot to be re-valued annually by CPI.

Calculating your ‘Pre / Post 2014’ Benefits Example Sian joined the LGPS on 1 April 1998 and has decided to retire on 31 March 2019 i.e. her Normal Pension Age. She has always been full time with her employer.

STEP 1 - Calculating the ‘CARE’ element Y1 2014 / 2015 1/49 x £29,000 = £591.84 £591.84 + CPI Y2 2015 / 2016 1/49 x £29,290 = £597.76 £1,189.60 + CPI Y3 2016 / 2017 1/49 x £29,582 = £603.71 £1,793.31 + CPI Y4 2017 / 2018 1/49 x £29,877 = £609.73 £2,403.04 + CPI Y5 2018 / 2019 1/49 x £30,175 = £615.82 £3,018.86 + CPI Total value of ‘CARE Pension Pot’ £3,018.86

STEP 2 - Calculating the ‘Final Salary’ element Membership from 1 April 1998 to 31 March 2008: 10 years Membership from 1 April 2008 to 31 March 2014: 6 years Final pay as at 31 March 2019: £ 30,175 Annual Pension: = £ 6,789 (10 ÷ 80 x £30,175 = £3,772 + 6 ÷ 60 x £30,175 = £3,017) Automatic Lump Sum: 10 ÷ 80 x £30,175 = £3,772 x 3 = £ 11,316

STEP 3 - Total value of Pension Benefits CARE pension pot : Annual Pension: £ 3,018.86 Final Salary element : Annual Pension: £ 6,789.00 Automatic Lump Sum: £ 11,316.00 Total Value of Annual Pension: £ 9,807.86 Automatic Lump Sum: £ 11,316.00

STEP 4 - Commutation Option Annual Pension: £ 9,807.86 Automatic Lump Sum: £ 11,316.00 Amount of Annual Pension to be given up: £ 2,896.59 Remaining Annual Pension: (£9,807.86 - £2,896.59) £ 6,911.27 Maximum Tax Free Lump Sum: (12 x £2,896.59 + £11,316) £ 46,075.08

Will my benefits be reduced?  Benefits payable before ‘Normal Pension Age’ (NPA) will continue to be actuarially reduced to take account of early payment, although certain ‘85 year rule’ protections will continue.  Exclusions to the rule... benefits payable on the grounds of ill health, redundancy or efficiency.  Benefits paid later than your NPA will continue to be actuarially increased to take account of late payment.

Reduction Factors Years Early Pension (M) Pension (F) Auto Lump Sum (B) 1 6% 5% 3% 2 11% 11% 6% 3 16% 15% 8% 4 20% 20% 11% 5 25% 24% 14% 6 29% 27% 16% 7 32% 31% 19% 8 36% 34% 21% 9 39% 37% 23% 10 42% 40% 26%

Additional Voluntary Contributions (AVC) Arrangement set up on Arrangement set up on or before 31 March 2014 or after 1 April 2014 Limit on Up to 100% of 50% of pensionable pay Contributions pensionable pay Tax Free Cash Limited to Max. Up to 100% of AVC Fund Option upon 25% of AVC Fund (Subject to HMRC limits) Retirement

Additional Pension Contributions (APC)  Replaces the Additional Regular Contributions (ARC) option.  ALL existing ‘Added Years’ / ARC contracts will be honoured .  In-house option to purchase an additional pension amount (maximum amount that can be purchased is £6,500).  The cost of the ‘contract’ is calculated by the Fund, which can then be paid monthly via the payroll or as a ‘one off lump sum’.  Contributions must NOT exceed 100% of monthly pensionable pay. Members gain tax relief on the additional contributions made.  Application subject to medical examination (as paid by the member).

What if I leave the Scheme?  You are still able to ‘opt out’ of the Scheme at any time.  You MUST obtain the ‘Opting Out Form’ from the Dyfed Pension Fund and return directly to your employer.  Qualification period has increased from 3 months to 2 years.  If decide to opt out or leave the Scheme with under 2 years membership, you will have the option to claim a refund, defer your benefits or transfer to another pension arrangement.

Can I pay less into the Scheme?  Members will have the option to pay 50% of normal contribution, to receive 50% of benefits during that period (per employment) under the new ‘50 / 50 option’.  For example... instead of paying 6.50% a member can elect to pay 3.25% but benefits will then be calculated at a 1/98th for that period.  However, FULL ‘ill health / death cover’ will be retained during the 50/50 period.  You will need to complete an Election Form (available from your Employer), which will then need to be returned to your Employer.

What are the other changes?  Ill health Retirement - Same 3 tier arrangement will apply. - Payable from any age, if you have 2 years membership.  Retirement on the grounds of Redundancy / Efficiency - Immediate payment of unreduced pension benefits. - Payable from age 55, if you have 2 years membership.  Flexible Retirement - With Employer consent ... reduction in working hours or grade. - Payable from age 55, if you have 2 years membership.

What happens if I die?  Added Life Assurance - Active - 3 x ‘assumed pensionable pay’ (inc. non-contractual overtime) - Deferred - 5 x annual pension - Pensioner - 10 x annual pension (less any already paid)  Survivor’s Pension - Will continue to be calculated at a rate of 1/160th. - Automatically payable to a Spouse & registered Civil Partner. - Now automatically payable to a Co-habiting Partner. - Pensions still payable to any ‘eligible children’.

Have you registered to MPO?  Interactive web portal providing you with 24 / 7 access to your pension details via the Fund website: www.dyfedpensionfund.org.uk  You will be able to: - update your contact details - update your death grant expression of wish - perform benefit calculations - view your annual benefit statement - view important Scheme information

Thank you for listening Any questions? Mathew James  MaJames@carmarthenshire.gov.uk  (01267) 224 043  www.dyfedpensionfund.org.uk